Deputy President Kgalema Motlanthe called on South Africa's social partners on Monday to set aside differences in interests and ideology to find solutions to the country's unemployment crisis and to support the stimulation of a "dynamic” and “inclusive" economy.

South Africa has one of the highest unemployment rates globally at 25%, and it is estimated that more than one-million jobs were lost as the economy felt the effects of the global financial crisis.

The country has since returned to growth, but only a small portion of those jobs had been regained, with some 170 000 formal sector jobs having been created in the last two quarters.

Speaking at the inaugural 'Development Conference on the New Growth Path (NGP)', comprising delegates from government, business, labour and academia, Motlanthe lamented the fact that the South African economy, which descended into three quarters of contraction in 2009, had not been able to recapture all of the jobs lost between 2008 and 2010, despite a return to growth.

“Employment remains about 5% lower than it was two years ago – a situation South Africa can ill afford, given high joblessness even before the downturn,” Motlanthe said, adding that stagnant private investment had seen total investment fall back below 20% of gross domestic product.

The NGP, which has a target of creating five-million new jobs by 2020, would seek to continue to increase State investment on infrastructure, while doing “more to crowd in the private sector”, which has more or less remained on the fixed-investment sidelines since the crisis.

Addressing the conference, hosted by Economic Development Minister Ebrahim Patel, but also attended by several fellow Ministers, including Finance Minister Pravin Gordhan, Trade and Industry Minister Dr Rob Davies and Public Enterprises Minister Malusi Gigaba, Motlanthe called for concrete ideas on how to implement policies that would foster more equitable and inclusive growth.

Patel went further in his address, suggesting that the challenge was not a shortage of "good ideas", but rather "purposeful and effective implementation". He argued that the challenge was not to innumerate many more and fresh ideas, but to also “look at the production chain between good ideas and implementation”.

It was acknowledged that the NGP was not a "grand blueprint" for all problems and that it carried risks. But Patel said that implementation should not be left paralysed by a fear of making mistakes. As and when problems arose, the policy would be reviewed and adapted.

Under the NGP, government had resolved that employment and the creation of more job opportunities would be the overriding priority that would shape the inevitable trade-offs in policymaking and implementation.

Motlanthe said the implementation plan had to based on the "assumption" that jobs needed to be created “on scale” in sectors such as manufacturing, agriculture, mining and tourism, which the NGP earmarks as “job drivers”.

Patel noted that, prior to the crisis, retail and financial services jobs had been created, but that these had turned out to be highly vulnerable to collapse.

The State would support a more efficient economy and ensure adequate infrastructure systems, education and social services. This would be accompanied by a commitment to reduce red tape to facilitate private investment.

But government would also intervene to transform exclusionary economic systems and structures that reproduce joblessness and inequality.

SOE’s, DFI’s SEEN AS KEY TO DELIVERY

Priority would be given to rebuilding South Africa’s productive sector and to leveraging manufacturing opportunities associated with the large infrastructure programmes of State-owned enterprises, or SoEs, such as Eskom and Transnet.

General government procurement would also be used to encourage localisation, with the National Treasury currently working on regulations to guide this process, and with the Department of Trade and Industry working to finalise the designation of sectors that would benefit.

South Africa’s development finance institutions, or DFIs, would also be core to the NGP vision of upscaling the productive sectors of the economy, with the Industrial Development Corporation (IDC) set to disburse R102-billion over the coming five-year period – a doubling up on disbursals achieved during the prior five-year period.

Of that amount, the IDC had been directed to set aside R22-billion for green industries, R21-billion to support mining and agriculture, a further R8-billion for agricultural processing and R15-billion for the tourism and high-value service sectors.

Patel said that as much as R10-billion of that would be distributed at a rate of “prime minus 3%”, while R7-billion to R10-billion would be directed towards investments in the rest of Africa.

The NGP gathering, which was described as the first in a series, was running parallel to engagements in the National Economic Development and Labour Council (Nedlac) aimed at reaching “sufficient consensus” on the plan’s implementation – or at least on those elements of the NGP around which consensus could be secured.
Organised business confirmed recently that the Nedlac talks were focused on dealing with the prevailing skills deficit, improving basic education, increasing local procurement, stimulating small business development and galvanizing the so-called green economy.

There was, however, still much division over the NGP's macroeconomic package, which called for fiscal tightening and monetary loosening. The idea is to use a more flexible monetary policy model to facilitate a weakening of the South African rand to bolster the competitiveness of South Africa’s tradeables sector.

However, in light of rising food and fuel prices, as well as other inflationary pressures, there is also strong resistance to calls for a weaker rand.